Some developers also specialize in certain types of games, such as RPGs or FPSs, an example of which would be Square-Enix who are mainly associated with the RPG genre. Some focus on porting games from one system to another. Some focus on translating games from one language to another, especially from Japanese to English. An unusual few do other kinds of software development work in addition to games.

Outside of publishers, there are well over 1,000 video game development companies today. Many are tiny 1- or 2-person operations creating Flash games for the web, or games for cell phones. Others are large companies with studios in multiple locations, with hundreds of employees. As a rule, developers are privately held companies; only a very few non-publishing developers have ever been publicly traded companies.

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Types of developers ==

Video game developers fall into one of three main categories: third-party developers, in-house developers, and the smaller independents. Developers usually employ a staff of programmers, game designers, artists, sound engineers, producers and game testers, though some of these roles may be outsourced. Confusingly, an individual person in any one of these roles may be referred to as a "video game developer".

Historically, the preferred development method has shifted several times. The original arcade and console games of the 1970s and early 1980s were developed in-house by manufacturers such as Atari and Williams, with each game using a single programmer. Meanwhile, the home computer market attracted hobbyist programmers who lacked the resources to publish their own games, which led to the first developer-publisher relationships. Although the earliest of these developers were effectively independents, selling directly to computer stores, industry trends towards larger, more expensive games and larger publishing contracts for national and global retail encouraged the development of a strong third-party. By the 1990s, independent development had almost disappeared from the industry consciousness, with a rare exception in id Software. In the mid-2000s, however, independents have seen a renewal of industry attention, primarily due to concerns over the overwhelming scope and cost of the games that major retail publishers now demand. Some developers are responding to these pressures either by leaving the retail publishing market entirely, or by streamlining their process with a new emphasis on outsourcing the bulk of their work, much as movie studios do.

Third-party developers are usually called upon by a video game publisher to develop a title for one or more systems. Both the publisher and the developer have a great deal of say as to the design and content of the game. In general, though, the publisher's wishes trump the developer's, as the publisher is paying the developer to create the game.

The business arrangement between the developer and publisher is governed by a contract, which specifies a list of milestones intended to be delivered, for example, every four to eight weeks. By receiving updated milestones, the publisher is able to verify that work is progressing quickly enough to meet the publisher's deadline, and to give direction to the developer if the game is turning out other than as expected in some way. When each milestone is completed and accepted, the publisher pays the developer an advance on royalties. The developer uses this money to fund its payroll and otherwise fund its operations.

Successful developers may maintain several teams working on different games for different publishers. In general, however, third-party developers tend to be small, and comprised of a single, closely-knit team.

Third-party game development is a volatile business, as small developers may be entirely dependent on money from one publisher. A single canceled game can be lethal to a small developer. Because of this, many of the smaller development companies last only a few years or sometimes only a few months. The continual struggle to get payment for milestones and to line up the next game contract is a persistent distraction to the management of every game developer.

A common and desirable "exit strategy" for an extremely successful video game developer is to sell the company to a publisher, and thus become an in-house developer.

In-house development teams tend to have more freedom as to the design and content of a game, compared to the third-party developers teams. Part of the reason for this is that since the developers are employees of the publisher, their interests are as exactly aligned with those of the publisher as is possible. The publisher can therefore spend much less effort making sure that the developer's decisions do not enrich the developer at the ultimate expense of the publisher.

In recent years the larger publishers have acquired several third-party developers. While these development teams are now technically "in-house" they often continue to operate in an autonomous manner, each with its own culture and work practices. For example: Activision acquired Raven (1997), Neversoft (1999), Z-Axis (2001), Treyarch (2001), Luxoflux (2002), Shaba (2002), Infinity Ward (2003) and Vicarious Visions (2005). All these developers continue to operate much as they did before acquisition, with the primary differences being in exclusivity and the financial details.

History has shown that publishers tend to be more forgiving of their own development teams going over budget and missing deadlines than third-party developers.

An in-house development team that works for a console hardware manufacturer is also known as a first-party developer. A company that is closely tied to a console manufacturer (or occasionally a publisher) is known as a second-party developer. Rather confusingly the publishers themselves are sometimes referred to as third-party developers in the context of their relationships with the console manufacturers (Sony, Microsoft and Nintendo). This particular distinction of first, second and third party developers does not generally apply to PC games development.

Independents are small software developers that are not owned by or beholden to a single publisher.

Some of these developers self-publish their games, relying on the Internet and word of mouth for publicity. Without the huge marketing budgets of mainstream publishers, their products never get as much recognition or popular acclaim as those of larger publishers. However, they are free to explore experimental themes and styles of gameplay that mainstream publishers would not risk their money on.

With the advent of digital distribution of inexpensive games on current game consoles, it is now becoming possible for independent developers to make direct deals with console manufacturers to get wide distribution for their games, such as Everyday Shooter, a downloadable PS3 game entirely created by a single person.

Other independent developers create game software for a number of video game publishers on various gaming platforms. In recent years this model has been in decline, with the larger publishers such as Electronic Arts and Activision increasingly turning to internal studios, usually former independent developers that they have acquired for the majority of their development needs.

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Quality of life==

Video game development is usually performed in an extremely casual business environment. T-shirts and sandals are common work attire. Work hours are usually flexible; many developers start the work day at 10:00 AM, though employees usually work at least a full 40 hours a week. Employees are paid fairly well for what seems to outsiders to be light work. Many developers have some sort of profit-sharing plan to reward their employees.

Many find this type of environment to be rewarding and pleasant, both professionally and personally. However, the industry is also known to require generally high working hours of its employees, sometimes at a level seen as unsustainable and destructive.

It should be noted that in addition to being within the software industry, game development is also within the entertainment industry, and most sectors of the entertainment industry (such as movies and television) are generally known to require long working hours and dedication from their employees. The creative rewards of entertainment industries in general attract more potential labor to the industry than some others, creating a competitive labor market within the industry and thus requiring a higher level of performance from those who wish to remain competitive as employees. However, even given this, many feel that current working conditions in the industry are causing significant deterioration of the quality of life of its employees, and within industry communities (such as the IGDA) there is an increasing amount of discussion about the problem. Factors such as 'crunch time', described below, tend to heighten the overload.

Most video game developers are notorious for overworking their employees. "Crunch time" is the point at which it is not going to achieve everything needed in order to complete the milestone on time, meaning the publisher will not pay the developer until the milestone is indeed completed; and since most development companies are such small operations, this presents a real risk that the company won't be able to pay its employees on time. Worse threats occur when it becomes apparent that the team won't be able to ship the game, as a whole, on time.

An extremely common management response to this is to invoke "crunch time", dictating a 60- to 80-hour week with work over the weekends, in the hope that the team will be able to catch up. The complexity of the work flow in video game creation makes it very difficult to manage the team's schedules, meaning that it is an unusual project that does not surprise its managers with slippage at some point.

Controversially, employees in the United States are not paid overtime pay when crunching, as all developers maintain salaried employees. Salaried employees are classified as exempt, who are not paid by the hour, and are classified as "professionals". Therefore, most state laws on overtime pay do not apply. A notable exception is California where software developers are specifically protected by enforcing a minimum hourly wage (for every hour worked) to be considered exempt. As of 2008, due to the amendment to California Labor Code Section 515.5 by Bill SB 929 , this minimum wage of $36/hour works out to be USD $74,880 per year.

Attention to crunching came to something of a head in 2004 when a blog entry titled "ea_spouse", a manifesto of sorts, was published. Railing against the cruelty of crunch time, it was posted by Erin Hoffman, the then-fiancee of Electronic Arts developer Leander Hasty (Hasty and Hoffman have since joined an independent development studio, 1st Playable Productions [1], and founded a website oriented towards the discussion of the game development environment industry wide, Gamewatch [2]). Hoffman said her life was being indirectly destroyed by the company's work policy. This led to a great deal of debate in the industry, but without any visible changes until March 2005, when Electronic Arts internally announced that it was planning to extend overtime pay to some of its employees not currently eligible.